TAMPA — The group seeking to buy the Tampa Bay Lightning seemed to clear one hurdle after presenting their purchase plan to the National Hockey League executive committee this week.
But a memo about the ongoing negotiations raises questions about OK Hockey's financial ability to run the team.
The memo, from Tampa Sports Authority general counsel John Van Voris, suggests OK Hockey is short on cash flow. The group doesn't have the money to assume guarantees in place to repay taxpayer subsidies if the team moves in the next decade.
OK Hockey principals are expecting the current owners, already lending much of the money to them for the $200-million purchase, to continue assuming that guarantee, according to Van Voris' account.
Another option, floated by lawyers negotiating the sale, is having local government forgo the guarantee in exchange for the NHL requiring the new owners to keep the team in Tampa at least seven more years.
That has surprised some representatives of the current ownership. Palace Sports & Entertainment President Tom Wilson said it was assumed OK Hockey would take on that obligation, which could reach nearly $25-million if the team were moved before 2021.
It may just be jockeying among lawyers negotiating the sale, he said, but two things are certain — the new owners have plenty of money to run a first-class team and they intend to stay in Tampa.
He noted that the main principals, movie producer Oren Koules and real estate developer Len Barrie, are young millionaires on the upswing.
"There can't be any concern about that," Wilson said. "They would never get accepted into the NHL without significant financial resources."
Koules declined to comment through a team spokesman, citing an NHL request to refrain from discussing a pending deal.
Palace Sports, headed by Detroit billionaire Bill Davidson, has claimed losses totaling $76-million since buying the team in 1999.
Van Voris' memo was prepared as a summary of negotiations for members of the TSA, which plays an oversight role in the Lightning's management of the St. Pete Times Forum, where the team plays. It also paraphrases a conversation between OK Hockey lawyer Glenn West and officials with the county, which owns the arena.
In it, Van Voris says he had been expecting OK Hockey to provide the county financial projections for operating the team. But "Mr. West indicated that there was no point preparing a pro forma financial statement because it would not show a sufficient net worth to justify releasing Palace Sports from its guarantees," Van Voris wrote in the May 21 memo.
He said OK Hockey may instead backstop the guarantee at a future point.
The team is entitled to tap up to $35-million for Times Forum renovations. But it would have to pay back as much as $25-million if the team is moved out of Tampa before 2021. It also would have to pay back as much as $4.5-million in property taxes if the team leaves within seven years.
County Debt Management Director Mike Merrill confirmed the negotiating lawyers have floated the idea of the NHL guaranteeing the team stay in Tampa.
He said he has no intention of recommending the county forfeit the financial guarantees pledged by Palace Sports.
"We have the leverage," he said.
Bill Varian can be reached at [email protected] or (813) 226-3387.